Pembina Pipeline Corp. to acquire Kinder Morgan Canada in $4.35b deal

Station piping at Pembina’s Valleyview Terminal Facility south of Valleyview, Alta. | submitted

What happened: Calgary-based midstream service company to acquire former owner of Trans Mountain Pipeline

Why it matters: Deal comes about a year after the federal government acquired the Trans Mountain pipeline from Kinder Morgan Canada

Pembina Pipeline Corporation (TSX:PPL) is set to acquire the former owner of the Trans Mountain pipeline in a deal pegged at $4.35 billion.

Calgary-based Pembina announced Wednesday (August 21) plans to buy Kinder Morgan Canada Ltd. (TSX:KML) and the U.S. portion of the Cochin pipeline, which runs 2,900 kilometres from Fort Saskatchewan to Chicago.

The American portion of the pipeline is owned by Kinder Morgan Inc., a separate entity from Kinder Morgan Canada.

The transaction values Kinder Morgan Canada at $2.3 billion, or $15.02 per share, while the American Cochin assets are valued at $2.05 billion for cash consideration.

"This acquisition is highly strategic for Pembina, providing enhanced integration with our existing franchise, entrance into exciting new businesses and clear visibility to creating long-term value for our shareholders," said Pembina president and CEO Mick Dilger said in a statement.

The deal also includes Vancouver Wharves, a 51-hectare bulk marine terminal facility transferring more than 4 million tonnes of bulk cargo annually.

Pembina said it has already identified a number of expansion possibilities for Vancouver Wharves.

The pending sale comes about a year after Ottawa closed a deal to acquire the controversial Trans Mountain pipeline from Kinder Morgan Canada for $4.5 billion.

Since then, Kinder Morgan Canada has been dipping its toes on the market but found no takers until this deal.